The National Living Wage will increase by 6.2% to £8.72 on 1 April 2020, the Treasury has announced this morning.
The move marks the biggest cash increase ever awarded by a government and will amount to an extra £930 a year for full-time workers aged 25 and over.
A further increase to the National Minimum Wage will also see pay increases for younger workers of between 4.6% and 6.5%. For 21- to 24-year-olds this will be a 6.5% increase from £7.70 to £8.20 an hour.
Almost three million workers will benefit from the increases, according to the Low Pay Commission.
Prime Minister Boris Johnson said: “Hard work should always pay, but for too long, people haven’t seen the pay rises they deserve.
“Our government will put a stop to that, giving nearly three million people from Edinburgh to Eastbourne a well-earned pay rise, including the biggest ever cash boost to the National Living Wage.
“But that’s not all. As we enter a new decade, we’re setting our sights higher, to help people earn more over the next five years and level up access to opportunity across our great country.”
The government has pledged to increase the National Living Wage to two-thirds of median earnings by 2024, provided economic conditions allow. Current forecasts would see set this rate at about £10.50 an hour.
UKHospitality has called on the government to deliver alternative tax reliefs to the industry to offset the increase.
Kate Nicholls, CEO, said "Hospitality operators absolutely want to reward the great work of their staff. In order to make that growth sustainable, other measures are needed to mitigate cost growth.
"UKHospitality has long argued that business rates place an unfair burden on hospitality. It is now critical that rates are cut for the sector in April, to provide relief while the government's commitment to a more fundamental review of business taxation is delivered.
"The new government must also address employer National Insurance Contributions so that business can pay higher wages while continuing to invest in their businesses and future jobs."